The Broken Window Fallacy

The broken window fallacy is a famous thought experiment that has stumped economists for decades. And to this day, you and your friends are probably still falling for it, and it's costing you money. Because it was first proposed in 1850 by this guy, Frederick. And the fallacy goes something like this. If you took a ball and threw it at your own window, and most people would think that this is a bad thing. Except now you have to get the window replaced. And to replace a window, you'll need to hire a window repairman. So you're employing and for him with the replacement, he'll need to hire someone to actually make the new window. And to get that new window, you'll need to have paid someone to melt sand into glass. And to get that sand, you'll need to have collected all that sand. So, and the entire chain, the economic activity that you sparked with breaking your window, it actually seemed like it might be a good thing, which would imply that we should break windows more often to spur more economic activity and help people get jobs and get paid more. But there's one major flaw in this thinking, and it's a simple term: opportunity cost. By just using that exact same $500 that you spent on a repair to do something else, you could have had a perfectly functioning window and sparked $500 worth of additional economic activity in goods and services, for something else that you actually wanted. Money Mind, and I teach you about money one story at a time. So follow.